Americans for Tax Reform sent today the following letter to Representative Boustany (R-LA):
On behalf of Americans for Tax Reform, I am pleased to support H.R. 1834, a bill that would create a one-year tax reduction on repatriated overseas earnings of U.S. employers.
The U.S. is one of the only countries in the world that taxes income earned overseas by her own taxpayers. The amount that must be paid to the IRS is the difference between the U.S. corporate income tax rate of 35% (tied for highest in the developed world), and the tax already paid overseas.
By temporarily reducing the tax on money brought home, this bill will bring back hundreds of billions of dollars that can be used to invest in America and hire American workers. The punitive repatriation tax incentivizes companies to keep earnings overseas. Today, $1.4 trillion is sitting in foreign bank accounts, effectively unable to come to the U.S. because of this anti-competitive tax treatment. Industry estimates calculate that alleviating this tax burden in 2012 will result in a capital inflow to the United States of at least $800 billion.
Over time, the U.S. must move from a “worldwide” tax regime that seeks to tax U.S. employers all over the world. Instead, we should adopt a “territorial” regime which only seeks to tax profits earned within the United States. This is the system our global competitors use, and it’s an essential step toward making our country a good place to create jobs and do business. Repatriation is a good step in the direction of territoriality, and should be seen as progress toward that goal.
I urge all Members of Congress to co-sponsor H.R. 1834.